Newsflow around the coronavirus is likely to remain hairy for some time yet. It pays therefore to remain well invested in gold.
Share markets might have been in recovery for the past couple of days but safe-haven asset gold has remained well bought, too. The yellow metal has sprinted back towards $1,650 per ounce this week, in fact, and could be set for a fresh challenge to the recent seven-year peaks around $50 higher.
Some encouraging data on Covid-19 infection rates boosted stock investor appetite at the start of the week. This showed the rate of spread slow in some parts of the world like Europe. Signs that Chinese society is getting back to the cut and thrust of normal life boosted sentiment as well.
Don’t think that we are over the hump, however. A record 828 UK citizens have lost their lives in the past 24 hours because of the coronavirus. And in the US, a daily high of 1,858 deaths has just been reported. Also today, the World Health Organisation’s regional director, Dr Hans Kluge, said that the progress Europe had made in battling the crisis was “extremely fragile.”
He added that “we still have a long way to go in the marathon… to think we are coming close to an end point would be a dangerous thing to do.”
It’s clear, then, that demand for flight-to-safety assets could continue to boil for many months. It’s a theme that has already lit a fire under bullion demand since the start of 2020, as fresh World Gold Council (WGC) data today shows.
According to the body, global gold-backed exchange-traded funds (ETFs) and similar products added a whopping 298 tonnes of the shiny stuff during the first quarter. This was the largest inflow of new material for any quarter since 2016.
The value of these inflows amounted to $23bn, too, the highest quarterly figure ever.
More than half of the material (an enormous 151 tonnes) added during the first quarter flowed in during March when the coronavirus panic hit fever pitch. Total holdings now stand at record peaks of 3,185 tonnes.
Don’t just think of gold as a great play on current pandemic-related nervousness, though. Demand for the safe-haven asset and hard currency has in truth been flying for well over a year now, as WGC figures have repeatedly shown.
Global gold-backed ETF assets have swelled 56% during the past 12 months, reflecting rising fear over the world economy, major political troubles like Brexit and US-Chinese trade wars, and increasing inflationary concerns as central banks have slashed benchmark rates.
Some of the UK’s quoted bullion diggers have boomed in value on the back of this rampant investment interest. The FTSE 100‘s Polymetal, for one, is up 66% since this point in 2019. Meanwhile the FTSE 250’s Centamin has soared by almost half.
The prospect of more share price strength isn’t the only reason to buy these shares today, though. At current prices both still boast mighty dividend yields of 5.4% and 4.6% respectively.
Don’t miss our special stock presentation.
It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.
They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.
That’s why they’re referring to it as the FTSE’s ‘double agent’.
Because they believe it’s working both with the market… And against it.
To find out why we think you should add it to your portfolio today…
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.